40 C O N T E X T 1 2 6 : S E P T E M B E R 2 0 1 2 John Davies Reflections of value Research by the LSE for English Heritage has investigated the effects of conservation areas on house prices and what residents think about the experience of living in a conservation area. Conservation areas are widely considered to be valued, but until recently there has been limited systematic analysis of this. English Heritage commissioned the London School of Economics (LSE) to undertake the first large-scale rigorous assessment of the effects of conservation areas on value.1 The work, carried out by a team led by Gabriel Ahlfeldt, had two components: a statistical analysis of the effects of conservation areas on house prices and a qualitative analysis of residents’ perceptions. By dint of often having older properties, it might be expected that houses in conservation areas would sell for a premium due to being in a more central location or perhaps being larger.To isolate the effects of being in a conservation area, a statistical analysis was undertaken to adjust for the many other factors that affect house prices, such as the size of the property, its type (detached, semi-detached etc), its location in the country, and its distance from shops and transport links. The LSE analysed data on over a million property transactions between 1995 and 2010 from the Nationwide building society, and data on the shapes and characteristics of over 8,000 English conservation areas, combined with information on local areas. The extensive data requirements of the analysis, and some of the new statistical techniques involved, mean that it would not have been possible to do parts of the research until relatively recently. The analysis found that people value living in conservation areas as shown by houses in conservation areas selling for a premium. This is true even after adjusting for other factors that affect house prices. The research found that houses in conservation areas sold for 23 per cent more on average than houses outside conservation areas, without adjusting for other factors. When other factors that affect prices were controlled for, houses in conservation areas were still found to sell for a premium of around nine per cent, indicating the value people place on conservation areas.This premium is likely to be related to people’s appreciation of the areas’ architectural integrity, good design and traditional character. This premium was lower for conservation areas deemed to be ‘at risk’, being approximately four per cent, and higher for properties in larger conservation areas, older conservation areas, and those in suburban areas. Conservation areas were also found to have had stronger house price appreciation than other areas. On average, property prices in conservation areas grew at a rate that exceeded comparable properties elsewhere by 0.2 per cent a year. How the premium for living in a conservation area is affected by position The research analysed how house prices varied according to position in, or near, a conservation area.This found that properties closer to the centre of a conservation area had a higher premium. The premium for living
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